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Plan your year to avoid FDICIA compliance fear

Jan 31, 2023

By Drew VanderZanden

At the beginning of 2022, my wife and I set a goal to visit Europe in 2023. But we knew we couldn’t just show up to the airport one day, buy a plane ticket and hope it would all work out.

Some people can throw a dart at a map and get on a plane to some far-off location the next day. But the lack of planning would make my head explode. Instead, we spent 2022 planning where we would be going, how much it would cost, where we would stay and what would we do.

The planning has paid off. My wife and I are going into our June travels stress free. Or at least as stress free as anyone can be ahead of a 14-day vacation overseas to London, Amsterdam, Berlin and Prague.

Like what my family did throughout 2022, financial institutions must identify their goals for the coming year through their strategic planning and budgeting processes. These goals might be identifying and offering new deposit or loan products, building a new branch location or simply growth in asset size.

Whether asset growth is a goal or not, it is part of the inherent nature of being a financial institution. And it requires planning since asset growth comes with additional regulatory requirements. That includes compliance with the Federal Deposit Insurance Corporation (FDIC) Improvement Act, or FDICIA.

FDICIA reporting requirements

The FDIC has created two benchmarks for asset size that result in additional compliance and reporting: $500 million and $1 billion.

When planning, financial institutions should consider where their asset size will be on December 31 of that year. Depending on the amount, additional regulations imposed by the FDIC could affect their operations and financial reporting requirements.

The biggest burden for the $500 million mark is the required completion of a financial statements audit by an independent accounting firm. However, many financial institutions under this threshold are already in compliance with this requirement.

In comparison, the $1 billion mark takes much more work to meet the requirements. Ideally, through their strategic planning and budgeting process, financial institutions will accurately forecast their asset size crossing this threshold before they must be compliant. But this requires a proactive effort.

Planning gives financial institutions the time to properly prepare and avoid poor audit performance.

How Wipfli can help

Wipfli has all the tools, resources and knowledge that you need to identify your FDICIA compliance status. We can help your financial institution make planning for regulatory reporting as stress free as possible.

Download our FDICIA readiness guide today, to help make compliance easier.

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